Printers v. Professionals Publishing Inc.

Appeal from a judgment of the District Court for the Southern District of New York (Robert W. Sweet, Judge) awarding plaintiff damages, after a bench trial, for breach of contract. Affirmed.

Author: Newman

Before VAN GRAAFEILAND and NEWMAN, Circuit Judges, and WYATT, District Judge.*fn*

JON O. NEWMAN, Circuit Judge:

Professionals Publishing, Inc. ("Professionals") appeals from a judgment of the District Court for the Southern District of New York (Robert W. Sweet, Judge), awarding Printers II, Inc. ("Printers") $373,470.43 on a breach of contract claim following a bench trial. On appeal, Professionals contends that the District Court's factual findings were clearly erroneous and that it was entitled to a jury trial on two of its defenses and one of its counterclaims. For reasons that follow, we affirm.

I. Background

Printers is a District of Columbia corporation that operates a commercial printing press in Tuxedo, Maryland. Professionals is a Nevada publishing corporation with offices in New York and Pennsylvania. In 1982, Professionals hired Printers to print and circulate the first issue of the "Physicians' Travel and Meeting Guide" ("the Guide"). The Guide is a glossy publication that contains listings of meetings, symposia, and seminars for doctors, as well as editorial matter, articles, and advertisements. The Guide's subscription price is $20. In January 1983, Printers circulated 175,000 copies of the first issue, which consisted of 136 pages. Pursuant to contract, Printers was paid a previously agreed upon price after completing its services.

In June and July of 1983, the second issue of the Guide, the "Summer/Fall 1983" issue, was printed and mailed by Printers. The second issue appeared in both a pharmaceutical version, aimed at prescription-writing doctors, and a consumer version. Printers mailed 155,000 copies of the 120-page consumer version and 135,000 copies of the 168-page pharmaceutical version. Payment for the second issue was the result of an informal arrangement between the parties. No specific price had been set for Printers' services. Printers simply sent invoices to Professionals after completion of the entire job, which Professionals paid without complaint. Indeed, the parties were extremely solicitous of each other's needs. Although the terms of Printers' invoices required payment within thirty days of issue, the parties seem to have established ninety days as the appropriate payment period. To aid Printers in obtaining financing based on its invoices, Professionals executed two promissory notes to cover payment for the second issue.

These informal payment procedures, however, ultimately caused the relationship of the parties to deteriorate and led to the instant controversy. While the Guide's third issue, the "Winter/Spring 1984" issue, was in process, Printers invoiced Professionals for paper costs of $97,435.00 on October 20, 1983. Printers contends that the parties agreed to alter their previous course of dealing and that Printers was entitled to invoice Professionals for the paper to be used for the third issue upon receipt of the paper. Professionals contends that no invoices were to be sent prior to completion of Printers' work on the issue. After passage of ninety days, Printers demanded payment of the October 20 invoice. Robert Saum, the President of Printers, told Walter Doerk, the Printers' employee in charge of dealing with Professionals, that distribution of the third issue, which had begun in December 1983, would cease unless Professionals satisfied the paper invoice. Whether this communication was a threat or a plea for operating funds is a contention between the parties. The District Court found that Doerk communicated Saum's position to Professionals' President, Stephen Salinger. As a result, Professionals promptly paid the paper invoice.

The parties' difficulties were exacerbated by delays in the printing of the third issue. The chief problem was the inclusion of certain materials that had to be affixed to each copy by hand. In addition, Printers was required to prepare eight variations of the third issue to satisfy Professionals' needs. In December 1983 and January 1984, Printers distributed 185,000 copies of the 168-page consumer version and 135,080 copies of the 168-page consumer version and 135,080 of the 240-page pharmaceutical version. Printers issued a final invoice, dated January 17, 1984, for its services in the amount of $490,176.99. When Professionals objected to the charge for printing and binding, Printers negotiated a reduction with the outside binder and issued a second "January 17, 1984" invoice in the amount of $436,371.99.

Professionals continued to object to the charge for printing and binding and also objected to the charge for paper. Although the parties were once within $5,000 of agreeing on Printers' compensation, negotiations broke down. Printers submitted its third "final" invoice dated April 3, 1984, for $373,470.43. The invoice reflected a credit for the $97,435.00 paper payment and $34,533.44 in new charges. However, except for these new developments, the total charge on the April 3 invoice was identical to that on the second January 17 invoice. To induce Professionals to tender payment, Printers wrote to the Guide's advertisers and informed them the Professionals had not paid its printing bill. This tactic did not induct payment.

Printers commenced this diversity action to obtain compensation for printing and mailing the third issue of the Guide. Printers alleged breach of contract and the right to a quantum meruit recovery. Professionals counterclaimed for libel, tortious interference with contractual relations, and prima facie tort.*fn1 Professionals demanded a jury. However, since the jury demand was untimely under Fed. R. Civ. P. 38(b), the District Court exercised its discretion under Noonan v. Cunard Steamship Co., 375 F.2d 69 (2d Cir. 1967), and Higgins v. Boeing Co., 526 F.2d 1004 (2d Cir. 1975), and refused to grant a jury trial. Professionals was subsequently allowed to amend its answer to allege duress and extortion as affirmative defenses and extortion as a counterclaim. Professionals then made a timely jury demand with respect to the new issues. The District Court bifurcated the trial and tried the non-jury issues first.

Following the bench trial, the District Court held that Printers' action was on the contract rather than in quantum meruit.*fn2 By analogy to UCC § 2-305, the District Court reasoned that Printers and Professionals had agreed upon a contract with an open price term. The central factual problem, therefore, was to ascertain the fair value of Printers' services. Although Professionals objected to the amount of the charges for paper and binding, the District Court held that the charges contained in the April 3, 1984, invoice were reasonable and entered judgment for Printers in the amount of that invoice.

The District Court rejected the libel counterclaim because it viewed the contents of Printers' letters to Professionals' advertisers as true. The letters stated that Professionals had not paid its printing bill, and such payment had not been made as of the dates of the letters. The District Court rejected the tortious interference counterclaim on the ground that Printers' letters had not caused Professionals any harm. Those advertisers who withdrew orders for ads in the fourth issue of the Guide did so, in the District Court's view, for reasons unrelated to Printers' writing campaign.*fn3 The District Court dismissed the counterclaim for prima facie tort as legally insufficient.*fn4

The District Court then turned to the duress and extortion issues, on which Professionals had timely demanded a jury. Without deciding whether New York would recognize an implied cause of action for extortion in violation of N.Y. Penal Law § 155.05(e) (McKinney 1975), the District Court held that Professionals could not successfully advance an extortion claim because any sums Professionals had been pressured into paying were rightfully due Printers. The Court rejected the duress and extortion affirmative defenses for the same ...

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